Ipca Labs stock nears record high, surges 6%; here's what brokerages say

The stock up 6% to Rs 862, trading close to its record high of Rs 907 touched on February 28, 2014 on the BSE in intra-day trade.

Shares of Ipca Laboratories surged 6 per cent to Rs 862 in intra-day trade on Friday, near its record high of Rs 907, touched on February 28, 2014. 

The stock has gained 9 per cent in the current week as compared to a 0.50 per cent rise in the benchmark S&P BSE Sensex in the same period.

The pharmaceutical company had posted healthy operational performance in December 2018 quarter (Q3FY19). The company’s Ebitda (earnings before interest, taxation, depreciation and ammortisation) margin before forex gain was expanded by 385 basis points (bps) at 22.48 per cent in Q3FY19 from 18.63 per cent in Q3FY18. The company's net profit increased 52 per cent year-on-year (YoY) to Rs 160 crore, while net total income grew 10 per cent at Rs 960 crore on YoY basis.

With a potential resolution of the three US plants under import alert (expect early re-inspection in FY20) and a pick-up in the institutional business (as supplies resume for global tenders in FY20), analysts at Equirus Securities believe margins will only scale up from here on.

Ipca guided for 14-15 per cent growth in FY20 for domestic formulations business. Export API was aided by Sartans across the EU market along with other products; we expect momentum to continue in FY20. Data verification for the Ratlam facility is likely to get over by March 2019-end; however, remediation work has been completed and await FDA reinspection, analysts at Elara Capital said in the quarterly update. The brokerage firm reiterated Buy rating on the stock with a new target price of Rs 975 from Rs 920 per share.

Analysts at Anand Rathi Share and Stock Brokers expect Ebitda margin to improve going forward. A favourable product mix due to less dependence on low-margin anti-malarials in domestic formulations and the rising contribution from export-branded generics, API price stabilization and reduced remediation cost from FY20 would help the EBITDA margin improve, the brokerage firm said, and maintained ‘buy’ rating with target price of Rs 955 per share.

At 12:09 pm, Ipca Labs was up 5.5 per cent at Rs 855 on the BSE, as compared to 0.43 per cent rise in the S&P BSE Sensex. A combined 266,755 equity shares have changed hands on the counter on the NSE and BSE so far.